FSA is working with the ABI and other trade bodies to establish a course of action
The FSA is preparing to take action over the practice of insurers contacting victims of accidents directly, known as third-party capture.
The FSA is worried that this practice, designed to keep lawyers out of the claims process and to keep costs down, puts consumers at risk.
It has completed a risk assessment, started in late 2007, and is now working with trade bodies including the ABI on the next step.
In answer to a parliamentary question on 27 October, Exchequer secretary Sarah McCarthy-Fry said: “The FSA has carried out exploratory work on the issue of third-party capture in the insurance industry to assess the nature of the practice and the level of risk to consumers.
“It is currently liaising with the relevant trade bodies to agree what action can be taken by the industry to mitigate the risks to consumers.
“The FSA will then consider what further actions, if any, are required to address any residual consumer risk attached to the practice.”
The ABI declined to comment.